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TMI Blog2015 (8) TMI 1473X X X X Extracts X X X X X X X X Extracts X X X X ..... service received for the purpose of determining Arms length price in Transfer pricing matters. The onus is on the assessee to substantiate its claim. Just because the operating cost incurred by the assessee company is less than the operating cost of the comparable companies, the claim of expenses incurred towards payment made to its parent company on an adhoc basis cannot be justified. In modern management and technical field there are sufficient ways and measures to measure the services rendered by one entity to other entity - the assessee is bound to produce satisfactory evidence before the Revenue to establish its stand. In fact in this instance case the entire confusion has arisen because the assessee company has not submitted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted before us that the assessee had incurred management fee of ₹ 1,18,82,436/- towards:- (a) New Customer development related work (b) Raw material procurement from Korea and other countrysupport (c) Critical issue support (d) Time cost of Finance and Accounts support team (e) Time cost charge in respect of top level management persons visit and regular support given. 5. On perusing the records and the balance sheet of the assessee, the Bench observe that the management service fee of ₹ 1,84,85,866/- was disclosed in the Balance Sheet of the assessee under the head direct manufacturing cost , sub-head factory expenses . The relevant portion of the statement of accounts is reproduced herein below for r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 749,641 Import Freight Charges 629,251 1,925,550 Management Service Agreement Fee 18,485,866 Royalty Cess 35,266,506 17,948,061 Technical Disclosure fee 1,341,967 9,379,782 Wages 9,982,571 8,909,299 Total 93,670,402 71,884,079 SCHEDULE NO. 16 31.03.2010 31.03.2008 Administrative Overheads ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thereafter, the Bench queried how the aforesaid expenditure could be treated as administrative overheads/ management fee . On perusing the order of the Ld.TPO also, it was observed that the Ld.TPO had proceeded with the case on the premises that the aforesaid amount falls under the category of Management fee paid to its parent company M/s.Infac Corporation, Korea for rendering managerial services. Further, it is observed from the order of the Ld. TPO that the assessee had submitted before the Revenue the aforesaid payments related to:- 1. ECB loan related work 2. New customer development related work 3.Raw material procurement from Korea and other country support 4.TFT(Task Force Team) organized for MTM Cable of HMI to imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter has to be remitted back to the file of Ld. TPO for denovo consideration because both the assessee as well as the Revenue has not examined the issue with respect to the correct factual matrix. Management services and Technical services false under different field and the nature of work involved both these services are different. Further, when the assessee has made payments to its parent company it has to establish and justify the nature of payment and the nature of service received for the purpose of determining Arms length price in Transfer pricing matters. The onus is on the assessee to substantiate its claim. Just because the operating cost incurred by the assessee company is less than the operating cost of the comparable compa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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